Demanded to repay nearly $83 billion! Musk is "fighting" with Tesla shareholders again...

Tesla CEO Musk and shareholders due to the SolarCity acquisition of the "beam" after 5 years and ushered in new progress, this time, Musk can still retreat?

On January 19, 2016, according to foreign media reports, some shareholders of Tesla once again sued Musk in court, on the grounds that Musk had coerced the company's board of directors to reach a transaction to acquire solar power generation company SolarCity in 2016, demanding that Musk repay $13 billion (about 83 billion yuan).

Musk wants to return $13 billion?

On Tuesday, local time, Musk and the shareholders against Bo Gonggong because of the SolarCity acquisition case, and the two sides debated whether Musk coerced the board of directors to agree to the acquisition.

Shareholders allege that Musk had pressured Tesla's board to agree to Tesla's acquisition of SolarCity, which was underfunded at the time, as a "well-planned financial distress relief."

But Musk said through his lawyers that the deal to buy Solarcity is part of a long-term plan to build a vertically integrated company, and that the deal is not about bailing out SolarCity. At the time, the company's financial situation was similar to that of most high-growth tech companies, and it was not on the verge of bankruptcy.

According to public information, SolarCity was established in October 2008 and its main business is to sell and install solar power generation systems and other related products and services to residential, commercial and industrial customers. In 2013, Solar Power World magazine ranked it as the second largest solar installation company in the United States.

In 2016, Tesla acquired SolarCity for about $2.6 billion and restructured its solar business into Tesla Energy.

However, according to some sources, solarCity was actually a company co-founded by Musk's cousins Peter and Lyndon Rive, and at the same time, according to regulatory data, Musk also controlled 22% of SolarCity's shares at that time, totaling 21.8 million shares.

Therefore, at the same time as the acquisition was completed, Musk also acquired part of Tesla stock, which is about $13 billion (about 82.6 billion yuan) at the current price.

Shareholder lawyers believe that Musk should not have been given the corresponding shares from the beginning, which is a windfall for Musk. As a result, shareholders demanded that Musk return the shares or earnings.

But Elvin Chesler, a lawyer representing Musk, argued that shareholders were "ridiculous" to ask for $13 billion. He said the deal to buy SolarCity was largely handled by Tesla's board of directors, and he himself avoided price negotiations and specific acquisition details.

The acquisition of SolarCity remains in dispute

In fact, Musk's acquisition of SolarCity has long been less recognized by some of Tesla's board members. Since its acquisition in 2016, there has been a lot of internal disputes over the matter.

In 2016, Tesla was sued by multiple investors for providing flawed analysis in the deal to "mislead investors."

After four years, the case is still unfinished. Shareholders insisted that the deal, worth up to $2.6 billion, was not in the best interests of Tesla's shareholders and, instead, amounted to a "bailout of SolarCity."

In the final analysis, behind these controversies, it is because of SolarCity's "indisputable spirit".

SolarCity was in a loss-making position and at a disadvantage in peer competition before it was acquired. Goldman Sachs' equity research analysts believed at the time that "this energy company is the 'worst-off' of solar startups."

After the acquisition was completed, SolarCity's development was not satisfactory. SolarCity's number of new installs has reportedly plummeted after the acquisition, with Tesla installing 92 MW and 85 MW of solar power equipment in the first and second quarters of 2021, respectively. That's less than half of SolarCity's quarterly installs before the acquisition.

SolarCity is also struggling to make ends meet in terms of energy production and storage. According to Tesla's third quarterly report, as of the third quarter of 2021, Tesla's energy revenue was $2.101 billion (5.8% of total revenue), but the cost was $2.179 billion. At the same time, as of September 30, 2021, its net value in solar systems was $5.821 billion, a decrease of $158 million from the previous year's $5.979 billion.

Tesla, for its part, said it is further optimizing costs, especially installation costs, to improve the profitability of the energy sector. Musk has publicly stated many times that solar roofs will become another core business of Tesla after electric vehicles.

Not only that, SolarCity is also facing an investigation by the U.S. Securities and Exchange Commission for product quality issues. In 2019, Steven Henkes, a former quality engineer at SolarCity, reported to the SEC that Tesla knew there were safety hazards in SolarCity's solar panels but "did not shut down the system in time to reduce the risk and did not report the problem to regulators." ”

In December 2021, according to foreign media reports, the U.S. Securities and Exchange Commission has launched an investigation into whistleblower complaints against Tesla.

Reporter: Xiao Yisi Intern: Gao Xiuxiu

Edit: Zuo Yu

Editor-in-Charge: BiDandan

Cover image: Xiao Yisi